Norvald Monsen

Functions of accounting — a discussion

From the many accounting objectives which have been suggested, it seems that the intended function of accounting is to reduce uncertainty in control and decision-making processes. However, after conducting a literature search of empirical studies of accounting in action we came to three conclusions about the functions assigned to accounting. First, we suggest that a number of functions are assigned to accounting in action. Second, there is a reciprocal relationship between accounting and the functions assigned to it. Third, there is a complex relationship between accounting and its context. The main function of accounting in a strong organizational context with interdependent organizations is to support legitimization processes, while the main function of accounting in a strong organization with a dependent environment is to support the organization in its exercise of power.

The Case for Cameral Accounting

Cameral accounting was developed as early as the 16th century onwards in order to contribute to increased control of public money. Such a control demand does not seem to be of minor importance at the threshold of a new millennium as it was several centuries ago, and therefore Ludwig Mulhaupt in the excerpt above states that ‘Unfortunately there are very few researchers and practitioners who are interested in developing the cameral bookkeeping method, which is strongly to be regretted with a view to the importance of these questions.’ Most of the literature dealing with cameral accounting is published in German, and it seems to be known only to a small extent beyond the German speaking countries. The purpose of this article is therefore to present this historically important accounting model to a larger audience, allowing us to draw upon the experiences of cameral accounting in our continuous attempts to control public money, including the current international debate about the introduction of commercial (accrual) accounting in the public sector.

The Contingency Model of Governmental Accounting Innovations: a discussion

Comparative International Governmental Accounting Research (CIGAR) has been carried out for some twelve years. CIGAR research is, however, generally unfamiliar to researchers not belonging to the CIGAR network. Therefore, the paper aims at presenting and discussing critically CIGAR research with its Contingency Model of Governmental Accounting Innovations and suggests how CIGAR research and its Contingency Model could be developed.

Cameral Accounting and Cash Flow Reporting: Some Implications for Use of the Direct or Indirect Method

The most thoroughly debated format issue in designing a cash flow statement for a business enterprise concerns use ofthe direct or indirectmethod when reporting cash from operating activities. The article argues that the reason why we cannot solve this dilemma of using the direct or indirect method is related to the fact that our discussion is limited to using the axiom of double-entry bookkeeping within commercial accounting. In this article, however, the discussion of whether to use the direct or indirect method is not limited to commercial double-entry bookkeeping; it is also based upon another accounting framework, specifically designed to deal with cash transactions of governmental organizations: single-entry cameral accounting. The article argues that commercial accounting could learn from cameral accounting, separating cash from non-cash balance sheet changes, and directly prepare a cash flow statement from the single-entries of the cash transactions on the cash account, before they are entered into the double-entry bookkeeping system, to provide a performance result (revenues minus expenses) and related balance sheet information (assets, liabilities and equity). By applying this procedure, the direct method of preparing a cash flow statement becomes the natural method to use.

Comparing Cameral and Accrual Accounting in Local Governments

Historically the accounting models applied in the governmental and business sectors differ strongly. This difference is due to the fact that there are differences between governmental and business organizations, a point to be discussed further in the next section of the paper. In spite of these differences, however, there seems to be an international trend towards the replacement of traditional governmental accounting (e.g., cameral accounting) with business accounting (i.e., accrual accounting). For example, such a change occurred in the local governmental sector in Sweden in 1986 and a similar change occurred in Finland 10 years later. Currently there are similar changes going on with regard to state accounting in these two countries.

Governmental Accounting in Norway: A Discussion with Implications for International Development

Accrual accounting is now being introduced in governmental organizations internationally. Some scholars have, however, questioned this development, implying that other accounting theories, like cameral accounting, should also be considered for use in these organizations. Since Norway is a country, which has not introduced accrual accounting in the governmental sector, the purpose of this paper is to study the evolution of governmental accounting in this country. Based on the Norwegian experiences, the paper aims to present some conclusions for the further international development of governmental accounting.

An appraisal of efforts by the Nordic countries toward accounting standards harmonization

Abstract In the 1960s, the Nordic countries (Denmark, Finland, Norway, and Sweden) expressed their intention to harmonize their accounting standards. In April, 1969, the Nordic Council issued a Common Nordic Proposal for harmonization. Based on this proposal, new laws were issued in each country recommending similar forms and contents of corporate financial statements; however, the rules for measurement, reporting, and disclosure of financial information were not spelled out but left to be developed by the various national accounting bodies. The purpose of this article is: (1) to examine and compare the accounting standards in each Nordic country to determine whether regional harmonization has indeed been reached, and (2) to compare Nordic accounting standards to the European Union (EU) directives and the international accounting standards (IASs) to determine to what extent the Nordic standards are in conformance with them.

Silent accounting harmonisation: Towards the presentation of cash flow models in the local government and business fields in Norway

In most countries around the world there are differences in the systems of accounting in the business and non-business sectors. In recent years, however, the governments in some countries have started to apply the accrual-based accounting principles that are used in the business field. In Norway, however, another development can be noted. In the later 1980s business organisations and local governments both started independently to move towards a cash flow reporting system. It is thus suggested here that a silent accounting harmonisation process is taking place in Norway between business and local government. The purpose of the article is to describe and discuss this process, and the harmonised financial statements themselves. Suggestions for further research are also made.

Norsk Hydro's communication to international capital markets: A blend of accounting principles

Companies operating internationally are faced with the dilemma of how to attract investors from multiple exchanges to provide capital. While each investor may prefer a report tailored to his or her countrys generally accepted accounting and auditing framework, such an approach can be prohibitively expensive. The selection of International Accounting Standards Committee (IASC) guidance for reporting suffers from its lack of acceptance to date by the International Organization of Securities Commissions (IOSCO). The choice of the United States Generally Accepted Accounting Principles (U.S.GAAP) and Generally Accepted Auditing Standards (U.S. GAAS) facilitate access to large capital markers on the New York Stock Exchange, AMEX or NASDAQ but may not communicate effectively to the European or other markets. Norsk Hydro, the subject of this paper, chose to blend its domestic and U.S. accounting principles, with some episodic integration of European audit report language. The potential communication and regulatory challenges that resulted are described, as are the plethora of topics for future research, given such experimentation in financial reporting.